Rolling coverage of the latest economic and financial news
- Latest: Economists: Economic imbalances are worsening
- China’s GDP grew by 6.5% y/y in the fourth quarter, up from 4.9%
- Economy expanded by 2.3% last year – weakest in decades
- Factory growth up 7.3%, but retail sales slow to +4.6%
Shares in telecoms operator BT have dropped by over 2% this morning after it was hit by a £600m compensation claim.
British telecoms operator BT is facing a claim for almost £600m lodged by a consumer campaign group, which says the company failed to compensate fixed-line customers, many of them elderly, for overcharging.
The group, Collective Action on Land Lines (CALL), says the former monopoly failed to make up for increasing prices for customers over several years even though costs for providing the service were falling.
In the City, the FTSE 100 index has made a very subdued start – down 12 points or 0.2% at 6722.
UK property companies and builders are rallying, with British Land up 2.5% and Persimmon gaining 2.1%. They should benefit if the UK’s vaccination rollout allows the economy to reopen later this year, with the government hoping to offer all adults a first dose by September.
The FTSE100 remains up by just over 4% in the year to date, but vaccine rollout optimism and hopes of economic recovery have switched to the back burner for the moment given these other considerations.”
China’s stock market has rallied after today’s growth figures were released, with the CSI 300 closing 1.1% higher, at 5518.
That lifts the index back towards the 13-year high set last week.
An upbeat China Q4 GDP reading sent mainland and HK stocks higher, but failed to lift stocks in the rest of Asia:
– CSI 300 (+1.20%)
– Shanghai Composite (+0.91%)
– Hang Seng (+0.65%)
– Nikkei 225 (-1.01%)
– ASX 200 (-0.78%)
– Straits Times (-0.80%)
“Despite the latest dip in retail sales, we see plenty of upside to consumption as households run down the excess savings they accumulated last year.
“Meanwhile, the tailwinds from last year’s stimulus should keep industry and construction strong for a while longer.”
Meanwhile in the UK, house price have dropped as the temporary freeze in stamp duty nears its end — meaning some buyers could face an unwelcome tax bill.
Average property prices fell by 0.9%, or nearly £3,000, in January, according to Rightmove as sellers tried to find a buyer before the stamp duty holiday ends on 31st March.
Several analysts are concerned that China’s economy remains unbalanced, as last year’s recovery was driven by factory growth rather than consumption.
Robert Ward of the International Institute for Strategic Studies tweets:
China’s Q4 GDP up 6.5% YoY —>full-year 2020 growth to 2.3%. Optics good for Xi in run-up to July’s CCP 100th anniversary: CN only major economy to grow in 2020, Q4 gives strong statistical hand-off to Q1 print. But structural problems remain, not least reliance on debt for growth
Real GDP expanded by a stronger than expected annual rate of 6.5% in Q4 up from 4.9% in Q3. It meant that for the year as whole, China’s economy was one of the few global economies which recorded positive growth of 2.3%.
It was also encouraging industrial production growth accelerated to an annual rate of 7.3% in December. Consensus forecasts had been looking for a marginal slowdown in the pace of IP growth. However, it was not all good news for China’s economy.
#China Q4/20 GDP +6.5% yoy (+4.9% in Q3)
In December industrial production +7.0% yoy, real retail sales +3.1% (our own estimate).
Recovery continues, but imbalances continue to worsen. This year should see clear clampdown on indebtedness, real estate investment etc. Hopefully. pic.twitter.com/WFeb0OVxa8
China’s economy is now growing faster than before the pandemic, points out the Financial Times:
The Chinese economy grew 6.5 per cent in the fourth quarter of 2020, a faster rate than before the coronavirus pandemic that easily outpaced the expected performance of other big countries.
Gross domestic product growth for the final quarter beat expectations, according to official data released on Monday, with the Chinese economy expanding 2.3 per cent for the full year as industrial production continued to drive the country’s recovery.
“China has more than returned to trend growth,” said Raymond Yeung, chief economist for Greater China at Australia and New Zealand Banking Group. The strong rebound means authorities can “prioritize structural reforms rather than economic reflation” in 2021, he said.
The V-shaped recovery was based on successful control of Covid cases and fiscal and monetary stimulus which boosted investment in real estate and infrastructure. Growth was further spurred by overseas consumer demand for medical equipment and work-from-home devices, with exports expanding 3.6% in 2020 compared to the previous year.
That made the country the only major economy in the world to eke out an expansion, while others, facing a voracious virus onslaught, contracted.
China’s accelerating economic rebound, largely owing to the government’s drastic measures to contain the virus, will help boost the confidence of all other economies where a resurgence of infection cases is still taking tolls.
China’s #GDP topped 100 tln yuan for first time, reaching 101.59 tln yuan with 2.3% y-o-y expansion in 2020, said NBS official on Mon. It is estimated to account for 17% of global total for the year, with #China expected to become only major economy with positive growth in 2020. pic.twitter.com/hKVeXNXo8N
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China’s economy continues to recover with 2.6% QoQ GDP growth in Q4 and 6.5% annual growth. China is only major country to report positive growth rate in 2020; industrial production has exceeded expectations, while consumption has been a bit slower to recover #macrobond pic.twitter.com/FULzQCI0yG
The national economy recovered steadily, employment and living standards were ensured forcefully, and the main goals and tasks of economic and social development were accomplished better than expectation.
Industrial Production rose by an impressive 7.30% as the rest of the world’s insatiable demand for Made in China showed no signs of slowing down. By contrast, domestic data still showed the caution that has been prevalent throughout the year.
Retail Sales for December rose 4.60% versus 5.50% expected, a cause for joy in any other country but China. That likely reflects the Covid-19 restrictions in parts of the country and the freezing weather that has sent energy prices soaring.